I didn't actually say that the creation of the universe was "just for God's glory." I can't think of any verse in Scripture that explicitly says so, either. Certainly, God's glorification is fundamental to His creation of the universe, but it is not "just" for His glory that it exists. What I did say was,
"...the fundamental motive for God's creation of the universe was a gratuitous display of His unparalleled power and glorious attributes."
I know you didn't say that it was the only reason, but it would need to be the only reason to prove my argument wrong that God's actions are dictated by his nature of goodness. His nature can be creative too, or any number of other things (except evil of course) but my argument is about the goodness of his nature and how that affects what decisions he might make. You can add more dimensions to what might affect his choices, but you need to somehow take away the good nature's effect on whether he creates or not. It seems like creating us was a morally good thing though, since you admit we are better off.
If God needs anything, He is not God. God, by definition, is perfect, which necessarily entails needing nothing. As soon as you start talking about God needing something ("he needs to love us"), you aren't talking about the Christian, biblical conception of God. God, then, did not create us in order to satisfy a need He had. His aseity precludes such a possibility.
Maybe "need" is the wrong word. I can't think of a better one that isn't going to cause a disagreement though. Let's look at something we do agree on. God cannot lie. So it could be phrased "God needs to tell the truth". Now you would have a problem with that, or if I used a word like "compelled" or anything of that nature. So what word can we use instead of "need"? It has to be stronger than "want" though because then it would be possible for him to lie.
Only those who are born-again are God's children. All others are merely His creatures - actually, His enemies is how the Bible describes the unregenerate sinner.
God Loves All Humans Here's a link to an article that talks about all the reasons we should likely believe that God loves everybody. It isn't the article that made me think so, I had to look it up just now. I always got the impression that God was supposed to love everybody, but I suppose the Bible doesn't explicitly state it. Basically the article talks about how Jesus loves everyone (even his enemies), we are supposed to love everyone (even our enemies), and so God must love them too (particularly because Jesus was God). So I'm still pretty sure God loves everyone, even if they are his enemy. And he wouldn't want to do harm to people he loves unless it was ultimately a morally good decision.
Scripture is very clear that our feelings are not of major importance to God in His pursuit of His goals in the world. See the Book of Job. If it serves His purposes better, He will sacrifice us on the altar of His will rather than avoid causing us hurt. It's an uncomfortable thought but certainly the thoroughly-justified prerogative of the One who created and sustains everything.
But what are those purposes, in general? Ultimately, goodness is what I am arguing. Does God cause harm or allow harm sometimes? Of course. But I think the only reason would be for what is ultimately the best possible thing that we couldn't possibly see, at least not at the time. I've read that the story of Job is a story of inspiration for lots of people that are going through tough times. So it would seem that it served a purpose of being better for us than if God hadn't let all that happen to him.
I think that when we witness things in the Bible of terrible things happening, it is only more evidence that if God could have accomplished his plan with something nicer, he would have. In order for his plan to work, there is no other way for him to accomplish it than by doing things that a being of pure love wouldn't ever choose unless there wasn't a choice. If he did them in a nicer way at the time, it would surely result in much more terrible effects later. Otherwise, why would he? Sometimes when people talk about God's sovereignty, it sounds like God could just do terrible things on a whim, but then he wouldn't be righteous would he?
Like you stated, it was for a purpose, and I think that there is only one best solution for any given problem that leads to that purpose. If you consider the butterfly effect of the things that God did in the Bible on the billions and billions of people that would live in the aftermath of whatever decision it was that he made, is it really possible for there to be more than one totally, equally perfect decision?